Buffett Transforms His Portfolio

Friday

Buffett made big bets in tech in the third quarter, with the addition of IBM.

NEW YORK (TheStreet) -- All week, market commentators and fans of Warren Buffett have been clamoring over the investor's decision to take on a substantial stake in IBM(NYSE:IBM) in the third quarter.

On Wednesday, I shared my own take on this buy, as well has his investment in semiconductor giant, Intel(NYSE:INTC) in my article, "Buffett's Big Play for Tech."

While the surprise and magnitude of Buffett's IBM investment is certainly worth noting, the century-old icon of the technology industry is only one of the companies that received a Buffett-style blessing during the three-month period ending Sept. 30.

With a purchase of nearly 2.3 million shares, Visa(NYSE:V) became the second major credit card company to be added to the investor's legendary portfolio in 2011.
Warren Buffett

In May, it was disclosed that Berkshire Hathaway(NYSE:BRK.A) had taken on a notable position in Mastercard(NYSE:MA). American Express(NYSE:AXP) has long been a staple of the Berkshire portfolio as well, accounting for over 10% of its assets.

The media industry proved popular, too. Over the past quarter, the Nebraska-based firm welcomed the addition of Directv(NYSE:DTV) into its ranks, with an investment valued at nearly $180 million.

Defense giant General Dynamic(NYSE:GD) and drug store chain CVS Caremark(NYSE:CVS) rounded out the list of new names added to the legendary portfolio.

Excluding IBM, the newest additions each account for a less than $200 million of Berkshire's portfolio. Given the relatively small size, it is likely that it was one of Buffett's newest hires such as Todd Combs, rather than Buffett, himself, who pulled the trigger here.

Newcomers weren't the only ones that saw buying action over the past three months, however. Rather, stakes in veteran Berkshire Hathaway positions such as Dollar General(NYSE:DG), M&T Bank(NYSE:MTB) and Wells Fargo(NYSE:WFC) were increased as well.

Some have speculated that Buffett's willingness to increase his exposure to financial players such as Wells Fargo is a sign that the investor feels that the severity of the woes facing the U.S. and global financial system at this time are overplayed.

Prior to the full release of Buffett's 13-F filing, many made note of the staggering magnitude of the investor's third quarter shopping spree . Totaling nearly $24 billion, this was the largest cash expenditure seen from Berkshire Hathaway in 15 years.

Buffett wasn't entirely in a buying mood. Over the past quarter he also pared back his exposure to a handful of names include stable names like Johnson & Johnson(NYSE:JNJ) and food-giant Kraft(NYSE:KFT) were two of the most notable holdings that were cut back. In addition, Buffett reduced his exposure to oil giant and admitted mistake, ConocoPhillips(NYSE:COP).

With the latest adjustments, Berkshire Hathaway has gone through a number of noticeable transformations. For one, although Coca-Cola(NYSE:KO) remains the top holding, Wells Fargo's second place seat has been usurped by IBM. In total, the quartet of top Buffett holdings, rounded out by AXP, now comprises two-thirds of the portfolio's total assets.

Not surprising, the addition of IBM and Intel has shaken up the portfolio's sector breakdown as well. Accounting for a 17% slice of Berkshire Hathaway's investments, the technology sector has joined consumer goods and financials in representing the lion's share of assets.

Has Buffett's recent spending spree affected your views of the global markets? Feel free to leave a comment in the space below.